Required Reading for Web 2.0 Entrepreneurs

I just recommended that our World Vital Records team all get copies of the new book from 37signals called Getting Real. Get this: you can read it free online or buy a PDF or paperback version of it. They’ve sold 20,000 copies so far.

I will probably read part of it online and then buy the paperback version so I can mark it up like crazy, and put my notes at the end of the book the way Tim Sander’s teaches you to read in “Love Is the Killer App” (my most highly recommended business book of all time.)

Also, I was on a Facebook online marketing group tonight and found out that Paul Graham’s Y Combinator has released a reddit-like news aggregator for startup entrepreneurs. Check it out: it’s going to be recommended reading for all the entrepreneurs I know.

Paul Graham’s Y Combinator is an incredibly cool incubator/seed stage funding mechanism with an incredible focus on technology startups. If I ever do an incubator again (after spending the next N years running World Vital Records), I’ll meet with Paul first and try to learn from what he is doing. I think he’s nailing it.

But, I may never do an internet incubator again, since Geni just demonstrated that a genealogy/family social networking web site can become worth $100 million in about 8 months.

Can you believe it!!! With 100,000 users in less than 2 months, and with $10 million in new funding (at a $100 million post-money valuation) Geni is poised to become one of the most important players in the genealogy world.

It will be interesting to see their revenue model, as it unfolds.

We found at MyFamily.com that it was nearly impossible to make money with online advertising. When people are engaging with their family in private communications and content sharing, they are in what we called a “heads down” mode, that is, they were really focused on their family, and not willing to click on advertisements. We tried all kinds of things, but nothing worked.

Many other content sites are “heads up” sites, where people are in exploring or research mode and are totally ready to view ads and click on them. Our advertising click rates at MyFamily.com (where I worked from 1996-2002) were about low as I have ever seen anywhere.

So the Geni model, if it is advertising based, will be interesting to watch.

My guess is that Geni could be like YouTube–get acquired for a ton of money because of its number of users, without any regard whatsoever to revenue. That surely must be what the venture investors are thinking. If an exit like that happens, more power to them.

But if an exit like that doesn’t happen, in other words, if Geni is required to make money (and a lot of it because the valuation is so high), then the company might have to severely compromise its user experience, and bombard people with online and email ads in order to survive.

World Vital Records has been working on its “MySpace for Families” business for several months now, before we had heard about Geni’s launch in January. So we believe in this space. But unfortunately, we weren’t the first one’s to launch a real Web 2.0 application for family history.

But we believe that our angle is very unique. Our team has deep roots in family history, and our approach is very different from Geni’s, although we can certainly learn a lot from what they are doing. Our social network site won’t have to make money because our genealogy subscription site is doing that for us (we had a record month in February), so it can focus on member acquisition and user generated content.

Our site will be called FamilyL— something. Stay tuned.

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2 Comments

  1. Adam C.

    Paul,

    I totally agree about the book, Getting Real. Though it has been written with the Internet Startups in mind, I believe the principles it teaches–Build Less, Embrace Constraints, Half Not Half-Assed, etc.–apply to anyone responsible for getting the smallest of projects launched and rolled live. From banner ads to YouTube-killing sites.

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